Korea’s Ministry of Health and Welfare announced today that a sweeping reform will change pharmaceutical pricing from March onwards. The reform will be called the “Measures to Improve Drug Pricing Systems to Reward Innovation and Strengthen Health Security”. The goal of the reforms will be to reward drug innovation while ensuring stable supplies of necessary medicines.
The long-standing demands by big pharma have finally been answered with this shift in policy, which is aligned with the wider framework of deregulation sought by Korea’s Yoon Suk Yeol administration. These reforms are expected to be received favorably by both domestic and foreign pharmaceutical companies. Under the new system, innovative drugs with comparable or better efficacy than existing treatments will be granted clear price advantages. Even without economic evaluation data, manufacturers may set the price of their product at the highest price among alternative drugs or 1.8 times the weighted average of all the comparable treatments on the market, whichever is lower.
To ensure the domestic supply of medicines, an extra price incentive of up to 27% will be provided for essential medicines that incorporate Korean-manufactured ingredients. Moreover, there will be some relaxation in economic evaluation standards, particularly those related to cost-effectiveness assessments for new drugs. Another important reform is the extension of the Risk Sharing Agreement (RSA) beyond treatments just for cancer and rare diseases. Originally established in 2013, the RSA helps patients alleviate the financial burden caused by serious diseases. The RSA will now cover other severe chronic conditions in addition to cancer and rare diseases.
Written by: Ames Gross – President and Founder, Pacific Bridge Medical (PBM)
Mr. Gross founded PBM in 1988 and has helped hundreds of medical companies with regulatory and business development issues in Asia. He is recognized nationally and internationally as a leader in the Asian medical markets. Mr. Gross has a BA degree, Phi Beta Kappa, from the University of Pennsylvania and an MBA from Columbia University.